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frictions in which bank assets are a portfolio of defaultable loans. We show that ex-ante imperfect diversification of bank … lending generates bank asset returns with limited upside but significant downside risk. The asymmetric distribution of these … returns and their implications for the evolution of bank net worth are important for capturing the frequency and severity of …
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Using confidential information on banks' portfolios, inaccessible to market participants, we show that banks that emphasize the environment in their disclosures extend a higher volume of credit to brown borrowers, without charging higher interest rates or shortening debt maturity. These results...
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We develop a dynamic general equilibrium model for the positive and normative analysis of macroprudential policies. Optimizing financial intermediaries allocate their scarce net worth together with funds raised from saving households across two lending activities, mortgage and corporate lending....
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